The Big Picture

The Euro’s German Question

The German Federal Constitutional Court’s recent ruling against the European Central Bank shocked many observers and could have far-reaching implications for the eurozone. What are the likely consequences of the court’s assertion of authority, and how should the ECB and the European Union respond?

In this Big Picture, Columbia University’s Willem H. Buiter says that the court’s ruling threatens to hamper the ECB’s efforts to assist distressed eurozone member states and could cause one or more countries to crash out of the monetary union. Katharina Pistor of Columbia Law School goes further, arguing that the judgment by an “out of control” court may even endanger the European Union’s survival.

Hans-Helmut Kotz, a former member of the executive board of the Bundesbank, takes a more optimistic view, arguing that the German judges’ criticism of the ECB may finally force the EU to adopt a common fiscal policy. But this probably won’t happen any time soon, notes Marcel Fratzscher of the DIW Berlin think tank. In the meantime – and despite the ruling’s many flaws – the ECB will need to strengthen its credibility with the German public.

Indeed, the University of Munich’s Hans-Werner Sinn argues that the German court’s ruling was a necessary reminder that the EU can be further developed only by its sovereign member states, and warns of potentially devastating consequences for the bloc should it initiate infringement proceedings against Germany. But Daniel Gros of the Centre for European Policy Studies compares today’s judicial clash to South Carolina’s efforts in the 1830s to nullify US federal tariff legislation, concluding that, like South Carolina, the German court picked a fight that Germany cannot win.

As of July 1 Germany will be leading the EU. Germany is not only the biggest EU member, it also belongs to the most competitive members in the World. So it will be in a position to make a difference in the EU.As a common EU citizen I would like to propose a " to do list ".The EU is not doing well. It is like a ship dead in the water. The economic performance is inadequate. Decisions are not made. The decisions that have been made are slow or poorly implemented. The lack of transparancy.Over the past decades the EU has tried to copy the USA. However it took the USA 200 years and several bloody civil wars to become one Nation.My suggestion is to drastically restructure the EU. Not on the bases of distant dreams but on to-days reality. The reality is the tremendous diversity of the EU members. A diversity developed over many years and often centuries. Attempts to bring cohesion in the EU should recognise that and take it as a starting point. It should allow for differences and regulations 'a la carte'.Instead of an EU as a Superstate (a bloc) the goal should be the Confederation.The members trying to achieve synergy by cooperation. If needed by help from Brussels.In example is given by the Air Force in my country. They take weekly turns with the Air Force of our neighbours to patrol the airspace of both our countries.

- One of the issues that most urgently requires attention is the unsustainable Euro.It creates division in North and South. The muddling through has to end. The pensions of the north can not be used to finance the debts or early retirement in the south.- It should be confirmed that the EU is a cooperation of sovereign memberstates.That each member is responsible for its own country. Help will be provided by the EU if needed. That the EU Council is leading the EU. That the ECB and the EU Commission are service providers of unelected officials. Mission creep will be discouraged (such as Spitzenkandidaten).- An EU managment team should be formed comprising of Germany, France, plus 4 representatives of groups of smaller Nation, reporting to the EU President.- To increase transparancy and democracy the EU Commission should directly communicate with the members on the development of regulations/policies . A new Senate is to formed ( of 54 members ) to supervise the process.- A transparant plan on the future of the EU will be prepared. The preparation of the plan will include contibutions by the common citizen.

Agreed. Stretching the eternal right to democracy into the eternal right to fiscal responsibility is not right. They are not the same. Lack of Democracy threatens life. Lack of fiscal responsibility only threatens quality and ego. This is where a smart push back should be focused.If you don't believe that, history and its discontents will inevitably remind you. As Germany, Authoritarians, Gangsters and even now the US is doing.

Huh? It looks to me like Germany is just saying to CJEU "Step up your game and do some research to justify such large actions" Yes, they are saying it loudly with teeth they may not legally have but they did not verbally say we aren't going to abide. They said work a little harder. The EU does need to step up its game and fast, before plutocrats and authoritarians make any further progress. Strengthen it now please!Of course, its hard to distinguish monetary policy from economic policy. No one would rely on monetary policy to save economies if it wasn't.

Why are they no business of the German court? That's a big statement. It needs explanation please. I do not know either EU law or German law, but don't members how contribute real value have a say in how it is spent?

The German Court has every right to voice its relevant claims. Presently countries such as Turkey are receiving much aid as exemplified by: "The EBRD is a major investor in Turkey. Since 2009 it has invested almost €12 billion in various sectors of the country’s economy, with almost all investment in the private sector. The EBRD’s €6.7 billion Turkey portfolio is the largest among the 38 economies where the Bank invests." Still, Turkey leadership does everything outside of Germany's borders, and inside of Germany's borders to attempt real destruction of any stability politically, and economically for the entire EU. The member states of the EU need to be sensible, and not allow further destruction of individual nations or the EU is totally more vulnerable than its present state.

I have no opinion about the legal matters here. But I will try to explain the strategies that lay underneath the German question.1. There is the question should the EU become a Superstate ( a bloc ) or a confederation ?2. There are two europhile parties pushing for the Superstate: France and the EU commission3. The EU commission is a service provider to the EU Council ( the EU leaders). They are the plumbers. The, not elected, officials. They think they know best and are always busy to obtain more power at the expense of the member states.4. There are significant differences in competitiveness between members in the North and South.5.The introduction of the Euro, some 20 years ago, has put the relations under severe stress. The introduction of the Euro meant that members could not cooperate as neighbours but also had to share their wallet.6. The Euro is not sustainable as long as the more competitive members are not willing to tranfer money to the less competitive ones.By the expansion with many new members and the extension of cooperation to Africa this has made the transfers an important issue.Experience with the Soviet Union has learnt that transfers do not lead to more competition and wealth.The EU is at a cross road:a. Go ahead with transfers. Become a Superstate, lead by France or the EU Commission.b. Break up the Eurozone in two or more groups.b. Go back to Market organisation ( EEC), every member its own currency.The issue has lead to jealousy, anger and frustration and no economic growth.The poor implementation has lead to the very costly Greek and Euro crisis.It has made the EU almost unmanagable.An attempt to write a plan for the future of the EU has been shelved.The citizen has lost almost all influence on the complex decisionmaking processes.For comments by the readers I refer to articles by Buiter and Pistor.

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